NGO : An OVERVIEW

NGO: An OVERVIEW

➢WHY NGO?
➢TYPES OF NGO.
➢DIFFRECNE BETWEEN SOCIETY, TRUST,
  AND NON-PROFIT MAKING COMPANY
➢BENEFITS TO DONOR'S
➢BENEFITS OF NGOs IN INDIA

 

WHY NGO?

❖ A person who has reached the same status of affluence are, as a matter of social obligation, giving a large number of donations. Is there any advantage for such person in forming a charitable organization under their control and management?

❖ Across the world, governments are mostly choosing the role of the welfare state, i.e. taking the case of the well-being of the people at large.

❖ The government, with limited resources and limited functionaries, Cannot reach the people in every nook and concern of the society.

It has to involve group/associations/organization at the grass root level to increase its reach since they are the people who know more about the ‘Real Issues’ faced by them. This limitation of the government and the idea of compassion and welfare for the public have given birth to the evolution of NGOs and NPOs in the society.

 

 

TYPE OF NGOs:

NGO Structural models in India:

  1. Trust, trust are the oldest and simplest form of organization as far as NPO sector in India is concerned there are a minimum number of formalities required for incorporation as well as day to day management of the trust is concerned. There are no statues available for the formation of a charitable

 

  1. Society, An organized voluntary association of people set up for religious, scientific, cultural, political, or other

 

  1. Non-profit Companies. (Charitable Foundations including private & public), the company registered under section 25 of company Act 1956 and now under section 8 of company Act 2013. This type of company doesn’t have a profit motive, and only for public benefits.

 

 

TRUST

No national law (except the broad principles of the India Trusts Act 1882, which governs private trusts) governs public charitable trusts in India, although many states (particularly like Maharashtra, Gujarat, Rajasthan, and Madhya Pradesh) have Public Trusts Acts.

Public charitable trusts, as distinguished from private trusts, are designed to benefit members of an uncertain and fluctuating class. In determining whether a trust is public or private, the key question is whether the class to be benefited constitutes a substantial segment of the public.

Typically, a public charitable trust must register with the office of the Charity Commissioner having jurisdiction over the trust (generally the Charity Commissioner of the state in which the trustees register the trust) to be eligible to apply for tax-exemption.

At least two trustees are required to register a public charitable trust. In general, Indian citizens serve as trustees, although there is no prohibition against non-natural legal persons or foreigners serving in this capacity. Legal title to the property of a public charitable trust vests in the trustees.

TRUST

Key Term of Trust:
1. Settler, The person who creates the trust is called the Settler.
2. Trustees, The person who manages the trust property for the benefit of the beneficiaries are called Trustees.
3. The beneficiary, A beneficiary of the trust is a person for whom a trust was created, and who receives the benefits of that trust.

Societies

Societies are membership organizations registered for charitable purposes. A governing council or a managing committee usually manages societies.
Societies are governed by the Societies Registration Act 1860, which has been adopted by various states.

NON-PROFIT COMPANY

 A  Non-profit making Company is a Company which:

(a) has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment or any such other object;
(b) intends to apply its profits, if any, or other income in promoting its objects; and
(c) aims to prohibit the payment of any dividend to its members.

 

 

BENEFITS TO DONOR’S

Donors: – A donor, who is a resident of India and a non-resident Indian holding an Indian Passport and also having taxable income in India, can claim income tax benefit from the donation made by NGO, which registered with Income Tax department through 12A, with tax exemption status under section 80 g, 80 GGA, 35 ac (i & ii), (i & iii) of the Income Tax Act of 1961.

 

Differences Among Trust, Society and Non-Profit Company.

Differential 

factors

Trust

Society

Non-Profit Company

Basic Document Trust Deed – which contains objects of

the trust (bye-law)

Memorandum of Association Articles of Association with rules

& regulations.

Memorandum of Association Articles of Association.
 

Formation

 

Very Easy Simple Little Hard
Jurisdiction Deputy Registrar / Charity Commissioner Registrar of Societies –

For Maharashtra Charity Commissioner

Registrar of Companies
Legislation / Statute Relevant state Trust Act – Bombay Public Trust Act 1950  

Societies Registration Act 1860

Indian Companies Act 2013

 

Objects Social benefits & Charitable Literary, Charitable, Scientific, and resource-oriented Nonprofit Activities
Amendment  or

Modification

of Objects

The alteration can be undertaken only by the Founder or settler.

If the founder deceased alteration of objects is impossible

Easy

Legal Procedures

Complicated Legal Procedures
Required Members Minimum = 2

Maximum =No limit

Minimum = 7

Maximum = No limit

Minimum = 7

Maximum = No limit

 Registration As Trust with the Registrar. As Society with Society Registrar – Both as a society and a trust in some states like Maharashtra.  As per Companies Act

under Section 8

 

 

 

 

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